Newsletter: Where Service Meets Reader Approval.
TMI Tax Updates - e-Newsletter
February 3, 2015
Case Laws in this Newsletter:
Income Tax
Customs
FEMA
Service Tax
Central Excise
CST, VAT & Sales Tax
Wealth tax
Indian Laws
Articles
News
Notifications
Circulars / Instructions / Orders
Highlights / Catch Notes
Income Tax
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The work which ultimately results as the culmination of the assessee’s efforts of compiling, editing, digital designing, etc - It is computer software that are produced or manufactured, to qualify for benefit under Section 10B - HC
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Income derived from slot charter operations of a tonnage tax company is to be included to determine the tonnage income of a tonnage tax company even if such operations are carried on in ships which are not qualifying ships - HC
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Scope of Section 153C - whether it enables the assessing officer to issue notice to third parties, on the basis of the satisfaction - matter remitted back for ascertaining facts - HC
Customs
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Condonation of delay - the inaction can be attributed only to the staff while the appellant/importer was away and the plea of mis-placement of the order, as pleaded by the appellant/importer is acceptable - HC
Wealth-tax
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Enhancement in value of land - land being used as business asset, its value was to be determined as per Rule 14 and not as per Rule 20 of Schedule III of wealth tax act - AT
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Wealth tax assessment - Wedding Gifts Trust - Once the Deed has stipulated that on the death of the two women, their children would become the beneficiaries, the occasion to invoke Section 21 (4) of the Act does not arise. - HC
VAT
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Works contract - supply, laying and spreading of ready mix concrete - No justifiable ground to accept that on the mere absence of the word "works contract" in the agreement, the transactions have to be treated as sale - HC
Case Laws:
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Income Tax
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2015 (2) TMI 21
Entertainment tax subsidy - whether a capital receipt? - Held that:- Any subsidy granted for setting up a business would constitute a capital receipt in the hands of the recipient, in the case of subsidy granted to the assessee co. pursuant to a scheme, the purpose of which was to encourage setting up of multiplexes in the state of UP and not augmentation of profit of the multiplex, the receipt by the assessee co. constitute a capital receipt. ITAT in the impugned orders has taken a correct view of law on the basis of available facts to conclude that the assessee is entitled, in terms of the UP Scheme, to treat the amounts collected towards entertainment tax as capital. The question of law raised in these appeals is, thus, answered in the negative against the revenue/appellant. - Decided in favour of assessee
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2015 (2) TMI 20
Benefit of Section 10B - whether assessee is engaged in activity which can be termed “manufacture”? - Held that:- In the present case Section 10B uses the expression “manufactures or produces… things or computer software”. The four stage process of compiling material, collating the text, designing the layout, scanning, digital image editing (to remove distortion) and final arrangement of the data, ultimately transmitted according to the customer’s specification - and ready to be used for printing, (or even e-Book publication) is undoubtedly manufacture or production. - Decided in favour of the assessee. Whether assessee’s manufacturing activity described earlier results in “computer software” - Held that:- In the present case, the work which ultimately results as the culmination of the assessee’s efforts of compiling, editing, digital designing, etc. “is transmitted or exported from India to any place outside India by any means". It is, therefore, computer software that are produced or manufactured, to qualify for benefit under Section 10B.- Decided in favour of the assessee
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2015 (2) TMI 19
Liability for FBT - Payment of uniform allowance etc. to the employees - Held that:- The facts which emerges from the record is that the respondent is a Government undertaking, operating all over India, and there is nothing on record that this issue had arisen in any State other then the State of Gujarat. In that view of the matter, it is required to be looked very seriously inasmuch as the benefits which are conferred to the other employees of the respondent-company throughout the country are accepted by the Revenue as benefit deductible and has not been considered as part of salary. Since assessee was governed FBT provision and the applicability of provision for salary will not apply and contention raised by assessee is rightly accepted by the Tribunal. We have gone through the provisions of section 12H and benefits which are conferred under section 115WB(2)(E) of the Income Tax Act. While reading clause(E), the provisions of section 17(2)(vi) whether the payment made under FBT is excluded or not, in our view, it is excluded. Decided in favour of assessee.
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2015 (2) TMI 18
Investment allowance granted in A.Y. 1983-84 and adjusted in A.Y. 1990-91 withdrawn in the year under consideration merely on cessation of some liabilities which is said to be taxable u/S 41(1) - Held that:- On plain reading of section 155(4A) of the Income Tax Act, we find substance in the contention of learned senior advocate for the appellant-assessee that the conditions which have been enumerated in clause 4A of Section 155 of the Income Tax Act are not fulfilled by the revenue. Therefore, we hold that the tribunal was not right in law in holding that investment allowance granted in A.Y. 1983-84 and adjusted in A.Y. 1990-91 can be withdrawn in the year under consideration - Decided in favour of assessee. Depreciation granted earlier withdrawn and taxed as income u/s 41(1) - Held that:- Insofar as this question is concerned, it appears from the record that the Tribunal has decided the appeal solely on the basis of the decision of the Bombay High Court in the case of Nectar Beverages (P) Ltd. v. Deputy Commissioner of Income Tax,[2004 (2) TMI 49 - BOMBAY High Court] . However, the said decision of the Bombay High Court has been reversed by the Apex Court in the case of Nectar Beverages (P) Ltd. v. Deputy Commissioner of Income Tax, reported in [2009 (7) TMI 5 - SUPREME COURT ], therefore the question raised in this appeal is required to be answered in favour of the assessee and hold that the Tribunal was not right in law in holding that depreciation granted earlier can be withdrawn and taxed as income u/s 41(1) of the Act - Decided in favour of assessee. Enhancement of income - Held that:- Insofar as this question is concerned, in view of the decision of the Apex Court in the case of Micorp Global P. Ltd. v. Commissioner of Income Tax (2009 (2) TMI 5 - SUPREME COURT), the same is also required to be answered in favour of the assessee.
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2015 (2) TMI 17
Service income - “business income” V/S “income from other sources” - revenue urged that mere earning of some income in a mechanical manner or the accretion of certain sums on a regular basis would not mean that it is business income - Held that:- This test of "some real, substantial and systematic or organised course of activity or conduct with a set purpose" to determine whether an activity was business. In view of this settled position, there is no scope for interference with the findings of the CIT (A) and the ITAT on this aspect. This Court thus holds that the “service income” declared by the assesse for the relevant years is business income. Disallowance of Royalty - Held that:- In examining a claim for deduction on the ground of commercial expediency, what is to be seen is not whether it was compulsory for the assessee to make the payment, but whether it was of commercial expediency. As long as the payment is made for the purposes of the business, and not by way of penalty for infraction of any law, the same would be allowable as a deduction (Sri Venkata Satyanarayana Rice Mill Contractors Co. v. CIT [1996 (10) TMI 2 - SUPREME Court]). The commercial expediency of a businessman’s decision to incur a particular expenditure cannot be tested on the touchstone of strict legal liability to incur such expenditure. Such decisions are to be taken from a business point of view and have to be respected by the authorities, regardless of the fact that it may appear, to the latter, to be expenditure incurred unnecessarily or avoidably. In the present case, the ITAT recorded a finding that the royalty was for business purposes and what is more, payable to the assessee’s foreign principals. Its character as an expense - collected for payment to the said foreign party-has not been disputed. In the circumstances, the assessee’s claim that it was for business purposes alone, and no other reason, could not have been rejected by the AO. - Decided in favour of the assessee. Disallowance out of administrative expenses - Held that:- This Court is of the opinion that the findings of the ITAT cannot be faulted. The ultimate effect on the revenue would be the same, whether the assessee bore administrative expenses and costs of YRMPL or it remitted such amount to YRMPL, its wholly owned subsidiary, towards such costs. The final effect is revenue-neutral. Having regard to these circumstances, this court holds that the question of law framed in this regard is to be answered in favour of the assessee. Disallowance on account of non-business use of some specific assets - Held that:- The revenue does not dispute the ITAT’s finding that as part of its emolument policy, the assessee reimburses expenses incurred by its employees on purchase of furnishings. Such reimbursements are made by the assessee to the employees only to the extent of their entitlement (determined on the basis of their grade or level in terms of their appointment letters). These expenses cannot be, therefore, termed as personal to the assessee’s employees, but are for its business purposes. In these circumstances, there is no infirmity with the order of ITAT. - Decided in favour of the assessee. Expenses for food tasting and trials - Whether be capitalized? - Held that:- In the present case, it is not disputed that the assessee is engaged in the restaurant business. As part of its commercial activity, it strives to develop new recipes to develop its clientele, or expand it. The amounts expended towards such development are part of its business. Possibly, some recipes may be viable; equally possibly, all of them may be unviable. The mere possibility of the result of such exercise being a popular or long lasting recipe would not make the expenditure capital in nature. As such, it cannot be held that the food tasting development charges would result in a capital advantage of an enduring nature. - Decided in favour of assessee. Provisional liability - such claim was not based on any scientific method or on any reasonable past experience - Held that:- In the present case it is evident that the provision made by the assessee was based on past experience. Both the CIT (A) and the ITAT held this method was not objectionable. Besides doubting the estimation, the AO has not stated whether, in fact, such past experience did not constitute a rational basis for making provision. In these circumstances and in the light of the law declared in Bharat Earth Movers (2000 (8) TMI 4 - SUPREME Court), this question has to be answered in favour of the assessee.
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2015 (2) TMI 16
Income derived from `slot charter' operations of a `tonnage tax company' - whether liable to be excluded while determining the `tonnage income' under the `tonnage tax scheme' if such operations are carried on in ships which are not `qualifying ships' in terms of the provisions of that Chapter of the Act and the relevant provisions of the Income Tax Rules, 1962? - Held that:- Reverting to Sections 115VB, 115VC and 115VD, it can be seen that while it is necessary to own at least one qualifying ship for a company to be a qualifying company, operating ships may be either owned or chartered by the company and include slot charter, space charter or joint charter. These provisions clearly show that income derived from slot charter operations of a tonnage tax company is to be included to determine the tonnage income of a tonnage tax company even if such operations are carried on in ships which are not qualifying ships in terms of the provisions of Chapter XII G of the Act. We answer the question formulated above by holding that the income derived from slot charter operations of a tonnage tax company is not liable to be excluded while determining the tonnage income under the tonnage tax scheme on the ground that such operations are carried on in ships which are not qualifying ships in terms of the provisions of Chapter XII G of the Act.
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2015 (2) TMI 15
Accrual of interest - Absence of interest for the proportionate period - AO was dissatisfied with its explanation that its borrower refused to pay any proportionate interest on the plea that the entire deposits had been recalled mid year. - Held that:- The CIT(Appeals) took into account not only the additional evidence (especially the letter which was doubted by the ITAT) but also the fact that the AO did not make any enquiry. Significantly, there was a remand directed by the CIT (Appeals) in the course of which apparently, the AO made no attempt to hold further enquiries. In the absence of any concrete material, and having regard to the circumstances that the assessee in fact maintained the mercantile system of account, the failure of the AO to exert himself and requisition the books of account and other material from the M/s. Escorts Ltd. if he felt that in fact such amounts were payable contractually or otherwise, in our opinion, could not have resulted in the addition which was ultimately directed. Having regard to these circumstances, this Court is of the opinion that the assessee, on the basis of the materials on record, was entitled to succeed on this question and the ITAT wrongly interfered with the CIT (Appeals)’s determination. Accordingly, the impugned order is set aside. - Decided in favour of assessee.
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2015 (2) TMI 14
Deduction U/S 80-IC - CIT(A) allowed the claim - Held that:- Present year was not the first year for claim of exemption and was rather 3rd year of such claim and in the earlier years such claim was allowed though u/s 143(1). Ld. D.R. did no bring to our notice that assessment of earlier years were also reopened to disallow the claim of assessee. As per Section 80-IC, the deduction is available for a period of 10 years starting form initial Assessment Year and initial Assessment Year has been defined as assessment year relevant to previous year in which undertaking or enterprise begins to manufacture and produce articles or things and in the case of assessee this is not an initial year.Though the case law relied upon by Ld. A.R. relates with the claim of exemption examined u/s 143(3) instead of u/s 143(1) as in the present case, yet for all practical purposes, the assessment u/s 143(1) and u/s 143(3) are one and same and therefore, for this reason also, the claim of assessee cannot be denied unless it is denied in the initial year which has not been done in the present case. - Decided in favour of assessee. Disallowance of sundry creditors - CIT(A) deleted the addition - Held that:- CIT(A) on 10.01.2013 had written a letter to ITO Hardwar wherein he had asked the A.O. to confirm as to whether the confirmations were placed in the file or not. We find that A.O. on 10.01.2013 itself had confirmed to Ld. CIT(A) Dehradun that the necessary confirmation were there in the file. Regarding argument of Ld. D.R. that assessee itself had stated that confirmations could not be filed vide its letter dated 23.11.2012, we find that the date of confirmations obtained by Ld. CIT(A) from A.O. is vide letter dated 10.01.2013 which is after the date of submissions and we find that A.O. had confirmed the fact that confirmations were on record and a copy of letter written by Ld. CIT(A) and reply submitted by ITO, Ward I on 10.01.2013 is placed on record. As the addition was made only on account of non confirmation of balances by creditors and therefore, grievance of revenue is removed with the finding of A.O. vide letter dated 10.01.2013 that the same were available in the file and therefore, we do not find any infirmity in the order of Ld. CIT(A) - Decided in favour of assessee. Disallowance u/s 40(a)(ia) confirmed by CIT(A) - Held that:- Ld. A.R. had advanced various arguments for its non liability for deduction of TDS u/s 40(a)(ia) on various counts and we are of the opinion that the same may also be examined by Ld. CIT(A) afresh in view of the arguments advanced by him - Decided in favour of assessee for statistical purposes. Disallowance on account of difference in confirmations - purchases as claimed by assessee and as per confirmation of different creditors - CIT(A) confirmed part addition - Held that:- We find that assessee in the form of reconciliation has tried to explain the difference by stating that creditors were maintaining two separate accounts for purchases made by Hardwar unit and Faridabad unit and, therefore, there was no difference in the purchases. We find that Ld. CIT(A) has not considered these arguments and has simply allowed relief by excluding opening balances, whereas in our opinion, the entire reconciliation of figures should have been examined by Ld. CIT(A) and after getting confirmations of the same from respective creditors, should have examined the explanation of assessee. - Decided in favour of assessee for statistical purposes.
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2015 (2) TMI 13
Disallowance of expenses and depreciation - assessee company has not only carrying out its business activities past 7-8 years but also not carried out any business activities in future 2-3 years - Ld. CIT(A) after examining all the expenses has restricted the disallowance to the tune of ₹ 8,68,705/- and given the relief of ₹ 18,35,634/- out of the total disallowance of ₹ 27,04,339/- - Held that:- Keeping in view the details of salaries paid to the employees of the assessee company, we find that Ld. CIT(A) has allowed the entire salary expenses to the assessee in the impugned order which is not permissible under the facts and circumstances of the present case, because the assessee company is not carrying out its business activities since past 7-8 years and also not carry out for subsequent 2-3 years amount to ₹ 6,42,432/- has wrongly been allowed by the Ld. CIT(A). After examining the same, we are of the view that under the facts and circumstances of the case and to keep the corporate status alive, minimum expenses on account of salary should be allowed to the assessee. Therefore, we allow the salary of one Account Assistant amounting to ₹ 87000/-; Computer Operator ₹ 73,367/-; Driver ₹ 49,400/-; Peon ₹ 38,400/- and salary of one CA ₹ 24,000/- only and salary for others claimed by the assessee and the other expenses are disallowed. AO is directed to recompute the income of the assessee, as per the directions given as aforesaid. - Decided in partly in favour of assessee. Services charges - assessed under the head “income from other sources” OR "profit and gains from business and profession" - Held that:- receipts by way of service charges does not form a continuous and systematic course of activity for the appellant. Some stray "referrals" in the case of its own directors and their relatives (for example director's son Sh. R. Malhotra and couple of business associates) resulted in booking of tickets through Span Excursions Pvt Ltd. Against that purchase, a few thousand by way of service charges has been received during the year. The income, therefore, was more of a casual nature. Keeping in view of the facts noted by the Ld. CIT(A) we are in agreement with his findings that there was no business income earned during the year and the amounts received in the form of credit notes were primarily casual in nature. Thus, they were rightly assessed under the head “income from other sources" - Decided against assessee. Expenditure on account of electricity and water charges, watch and ward charges, traveling expenses and Director’s remuneration, correctly diallowed by CIT(A) - Decided against assessee. Entitlment for deduction of expenses u/s. 30 to 37 - Held that:- AO has wrongly held that the assessee can claim expenses to the extent of business receipts only. Whereas the assessee is entitled to claim expenses covered under section 37 of the I.T. Act, therefore, direction is issue to the AO to reexamine the expenses and allow the same in view of the provisions of section 37 of the I.T. Act. - Decided in favour of assessee for statistical purposes.
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2015 (2) TMI 12
Disallowance u/s. 40A(3) - Held that:- Respectfully following the precedent of M/s Westland Developers Pvt. Ltd., vs. ACIT [2014 (12) TMI 254 - ITAT DELHI] wherein the Tribunal held that “Accordingly, on a consideration of the peculiar facts and circumstances of the case and the judgments relied upon considering the relevant provision of the Act namely Section 40A(3), we hold for the detailed reasons given hereinabove that Section 40A(3) of the Act has been wrongly invoked as admittedly no expenses relatable to the addition has been claimed and the assessee has successfully demonstrated that the payment were reimbursement made by CWPPL. - Decided in favour of assessee. Interest on PDCs paid out of books of account - CIT(A) deleted the addition - Held that:- Respectfully following the precedent of M/s IAG Promoter & Developers (P) Ltd. vs. ACIT [ 2014 (12) TMI 216 - ITAT DELHI] wherein the Tribunal held CIT(A) was rightly of the view that there is no evidence which proves that interest is paid from the date of sale to date of encashment of postdated cheques - where ever the date of PDCs are extended interest is paid @ 15% per annum in cash out of books of accounts which are evident from seized material - therefore, interest on PDCs to the extent of extension period appears to quite reasonable and logical - The ground raised by the Revenue is misconceived because CIT(A) has not deleted the addition but has only directed to recalculate the interest - Decided against revenue. Deemed dividend - CIT(A) deleted the addition - Held that:- Find considerable cogency in the contention of the Ld. Counsel of the assessee that the issue in dispute in the present case has been squarely covered in favor of the assessee by the decision of the Hon’ble Delhi High Court in CIT vs. Ankitech P Ltd. [2011 (5) TMI 325 - DELHI HIGH COURT ] stating that the legal fiction of section 2(22)(e) does not extend to “shareholder”. The fiction is not to be extended further for broadening the concept of shareholders. - Decided in favour of assessee.
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2015 (2) TMI 11
Scope of Section 153C - whether it enables the assessing officer to issue notice to third parties, on the basis of the satisfaction that “any money, bullion, any jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person” referred to in section 153A, i.e. the person searched, is wide enough to lead to a notice only on the basis of entries in some documents? - Held that:- ITAT should render specific findings as to the status of the documents and in that sense, connect with the concerned assessee’s third parties who were issued notice under Section 153C, and not merely the general nature of the documents in the form of production figures or amounts tabulated in a chart. This would give a clearer picture as to whether any document or material seized during the course of the proceedings belonged to any of the assessees. Thus remit the matter for reconsideration on the lines indicated above. The ITAT shall refer to the material in entirety in respect of each assessee and render specific findings on this aspect. - Decided in favour of revenue for statistical purposes.
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2015 (2) TMI 10
Penalty u/s 271D - addition on account of unexplained unsecured loans - Held that:- Admittedly the assessee had discharged its liability towards bank by entering into one time settlement and, therefore, the bona fide of the assessee in accepting cash loans from directors/ shareholders and employees could not be doubted. The entire exercise was revenue neutral and not to evade any tax. We, therefore, set aside the order of ld. CIT(A) and cancel the penalty levied by the AO u/s 271D of the I.T. Act. - Decided in favour of assessee.
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2015 (2) TMI 9
Disallowance of freight and lorry hire charges - Held that:- The assessee had furnished the primary evidence of the transaction but had failed to furnish the confirmation from the said party nor could the said party be produced for cross-examination. The expenditure incurred by the assessee was ₹ 3,12,300/- and though the same has been discharged by making cash payment on different dates, we find merit in the plea of the assessee where, the primary evidence of incurring the expenditure has been filed by the assessee i.e. the lorry receipt numbers, name of consignor, consignee, place of discharge, vehicle numbers, invoice number and date of sale between consignor and consignee; merely because the person could not traced during the course of assessment proceedings and the confirmation from the said party could not be filed does not establish the case of the Revenue that the said expenditure had not been incurred by the assessee. Accordingly, we direct the Assessing Officer to allow the expenditure of ₹ 3,12,300/-. - Decided in favour of assessee. Disallowance u/s 40A(3) - cash payment made on account of freight and lorry hire charges in excess of ₹ 20,000/- in a day - Held that:- Merely because while deducting the tax at source, the assessee had deducted the tax under section 194C of the Act, does not establish the case of the Revenue, especially, in the circumstances where the assessee had claimed that the deduction of tax was made under a wrong section. The payment made for hired vehicles through commission agents was though paid in cash exceeding ₹ 20,000/- falls within the exception provided in clause (k) to the Rule 6DD of the Rules and we find no merit in the orders of authorities below in disallowing the said payment as not allowable under section 40A(3) of the Act. Further in the statement recorded, the Director of assessee company had stated that advance lorry charges were paid in cash to parties. No query was raised as to the persons to whom payments are being made. In the said circumstances, we find no merit in orders of authorities below. Reversing the order of CIT(A), we direct the Assessing Officer to delete the disallowance made under section 40A(3) of the Act at ₹ 64,60,549/- - Decided in favour of assessee.
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2015 (2) TMI 8
Addition on account of outstanding liability of M/s Evershed - CIT(A)deleted the addition - Held that:- It is not disputed that the impugned amount has been adjusted towards professional fees on 12-1-2012 as per the regular method of accounting employed by assessee. The nature of assessee’s profession is such where the fees can be accounted for in the year in which the actual services are rendered and till then the amount received is to be treated as advance towards professional fees in the hands of assessee. We, therefore, do not find any infirmity in the order of CIT(A) on the issue in question. - Decided in favour of assessee. Disallowance of interest paid to the bank - CIT(A) deleted the addition made by the AO amounting to ₹ 1,08,67,588/- on account of proportionate interest disallowed out of total interest expenses of ₹ 2,10,35,698/- -AO pointed out that assessee had invested heavily in the Little & Co. which was a related party - Held that:- CIT(A) has not taken into consideration any additional evidence and has only considered the assesse’s plea regarding investment in the partnership firm M/s Little & Co., Mumbai, which was not made in the year under consideration but had been continuing since 19-5- 2006. Admittedly, the investment made by assessee in M/s Little & Co., Mumbai was on account of professional considerations inasmuch as the assessee had acquired 45% share in profit & loss account of the firm M/s Little & Co., Mumbai. Therefore, the amount outstanding against the said firm could not be treated as interest free loan calling for any disallowance of interest on proportionate basis. It was pure and simple professional arrangement between two firms and, therefore, the amount outstanding against M/s. Little & Co. was only on account of commercial expediency particularly when a dispute had cropped up between the two firms, which got finally settled by Hon’ble Supreme Court with the award of a sum of ₹ 8.5 crores in installments as noted earlier. The decision of Hon’ble Supreme Court in the case of SA Builders [2006 (12) TMI 82 - SUPREME COURT] is squarely applicable to the present set of facts, We, therefore, do not find any reason to interfere with the order of ld. CIT(A). - Decided in favour of assessee. Disallowance under the head London Rates & Taxes - CIT(A)deleted the addition - Held that:- The assessee had not submitted the necessary vouchers before the AO. Therefore, ld. CIT(A) should have called for a remand report before considering the assessee’s claim. We, therefore, restore this issue to the file of AO for deciding the issue de novo after taking into consideration the vouchers filed by assessee. - Decided in favour of assessee for statistical purposes.
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2015 (2) TMI 7
Registration u/s 12AA denied - assessee is a registered Trust under BPT Act w.e.f 27.10.2009 - wrong spelling in the name appearing on the PAN - Held that:- It is a fit case for granting registration u/s 12AA of the Act. Regarding the wrong spelling appearing on the PAN, we find prima facie the name of the assessee is printed wrongly on the PAN. We place our reliance more on the copy of the Pass-Port, copy of which is placed in the paper book of the assessee. Generally, the Pass-Port is "issued" to the citizens after completion of due verification by the investigation authorities and therefore, it assumes significance. In our opinion, the pass-port is more credible document. The other details about the Date of Birth, Father name etc which are found comparable but for spelling in the name of the settler. In our opinion, these frivolous discrepancies in the matters of spelling of a settler should not come on the way of granting of the registration of the trust, which is otherwise meant for general public utility. Accordingly, CIT is directed to allow the claim of the assessee for registration of the trust. [See Dawoodi Bhora Jamat 2014 (3) TMI 652 - SUPREME COURT] - Decided in favour of assessee.
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2015 (2) TMI 6
Disallowance made u/s 14A - CIT(A) deleted disallowance - Held that:- In the present cases as noted that assessee had made strategic investments in subsidiary companies and the purpose was to run hotels and the investments were not made for the purpose of earning dividend. Therefore, disallowance u/s 14A cannot be made. Further, we find that the subsidiary company in which the investment was made during the years were situated outside India, thus dividend if any received from them would not have been exempted. Therefore, keeping in view all facts and circumstances, the ground No.1 dismissed. - Decided in favour of assessee. Depreciation on world trade centre and world trade tower - CIT(A) deleted disallowance - Held that:- Similar issue has come up before the Tribunal in the assessee’s own case for the earlier Assessment Years 1995-96 to 2006-07 allowing the depreciation - Decided in favour of assessee.
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2015 (2) TMI 5
Treatment the interest income received by the assessee Co-operative Society - income from other sources or business income - CIT(A) allowed the claim of the assessee on the ground that the assessee is entitled to deduction u/s.80P(2)(a)(i) on account of interest from banks other than cooperative banks, interest on mutual funds long term and short term capital gain on mutual funds etc - Held that:- Following the decision in the case of Niphad Nagari Sahakari Patshanshta Ltd., Nashik (2015 (1) TMI 1004 - ITAT PUNE ) hold that the interest income earned by the assessee credit society on the fixed deposits from the bank other than Co- operative Society is a part of its business income. Same way the interest earned on Saving Bank A/c. with the Sindhudurg District Central Co-operative Bank Ltd. is also part of its business income. Also the dividend income is deductible u/s. 80P(2)(d) of the Act. - Decided in favour of the assessee.
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2015 (2) TMI 4
Reopening of assessment - reason to believe - Held that:- Non supplying of the reasons for reopening has vitiated the entire reassessment proceedings at the threshold, as per the decision of the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs CIT reported in (2002 (11) TMI 7 - SUPREME Court). In such a case we set aside the order of the CIT(A) and restore the case to the file of the AO, with a direction that the AO shall supply the reasons to the assessee and on receipt of the objections, he shall first dispose off the objections of the assessee and then proceed to frame the assessment. - Decided in favour of assessee for statistical purposes. Receipt of interest income - business income v/s income from other sources - Held that:-We cannot accept the reasoning of the revenue authorities wherein they have simply ignored the documents produced before them because the requisite documents were produced before the revenue authorities. We are of the opinion that interest received from Maneklal Bhandari at ₹ 8,99,120/- is to be treated as business income. However, interest on Income tax refund at ₹ 44,241/- is to be treated as income from other sources. We, therefore, set aside the order of the CIT(A) on this issue and direct the AO to treat the receipt of interest income from Mr. Maneklal Bhandari as business income (Rs. 8,99,120/- ). - Decided partly in favour of assessee. Disallowance of expenses - AO disallowed the expenses because there was no business of the business with regard to housing development - Held that:- It is a fact that there was a slowness in the business of the assessee but the assessee, as we have observed in the previous GOA, had diversified its business to housing finance and was maintaining its business premises and business modus. This clearly shows that the assessee was carrying on the business and the expenses being incurred were business expenses. It is also a fact that there is no claim of the revenue authorities to hold the expenses to be non genuine. In such a circumstances, we are inclined to accept the arguments and GOA of the assessee to allow the expense, as disallowed. - Decided in favour of assessee.
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2015 (2) TMI 3
Treating 50% of the agricultural income as income from other sources - Held that:- From the receipts of agricultural income, we find that the assessee is having sufficient agricultural income and has stated the same in the return. On this issue, we may clarify that the assessee at the request of the Bench pointed out that the receipts are only up to March 2004 and in the subsequent assessment year i.e., A.Y. 2005-06 receipts are from April to 30.3.2005. Hence the receipts for both the A.Ys. 2004-05 and 2005-06 have to be taken together and the total income declared by the assessee in the returns for A.Ys. 2004-05 and 2005-06 amounting to ₹ 10,57,768 and ₹ 7,41,439 have been produced. Therefore, we are of the opinion that the assessee has satisfactorily discharged his onus of (1) holding of agricultural land which has been gifted from his mother Dr. Adi Lakshmi, (2) income from the said land from grape and mango orchards and coconut trees which has accrued from the A.Y. 2001-02 and even from an earlier period in hands of his mother and (3) the net agricultural income has been arrived at supported by agricultural receipts which have been enlisted at pages 3 and 6 of the Paper Book for A.Ys. 2004-05 and 2005-06, respectively. The overall receipts for the two years put together add up to the income returned by the assessee. In these circumstances, disallowance of 50% of the claim, holding the same to be income from other sources by the CIT(A), is not justified. - Decided in favour of assessee.
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2015 (2) TMI 2
Unaccounted donations - CIT(Appeals) not accepting the status of appellant as ‘ EDUCATIONAL INSTITUTION’ - whether Assessing Officer has not afforded proper opportunity of being heard to the appellant, even after narrating the facts - Held that:- the present case it is an admitted fact that the AO allowed the last opportunity to the assessee by fixing hearing of the case on 03.11.2006. On the said date, the assessee could not appear and the explanation was given that the local elections being held in some parts of the District Bulandshahar, Gautam Budh Nagar, Noida, and the boarders were sealed, so there was a reasonable cause for not attending the proceedings on 03.11.2006. The contention of the assessee that on 06.11.2006 counsels as well as the president of the assessee society appeared before the AO had not been rebutted. It is also noticed that the assessment order has been passed by the AO on 06.11.2006. In the present case the assessee furnished the details of the donors in which the old and new addresses were mentioned, but the ld. CIT(A) had not considered the said list of the donors while passing the impugned order. It is well settled that nobody should be condemned unheard as per the maxim “Audi Alteram Pertam”. In our opinion, in the present case a proper opportunity of being heard was not given to the assessee by the AO to explain its case. We, therefore, deem it proper to set aside the impugned order passed by the ld. CIT(A) and the issue is remanded back to the file of the AO for fresh adjudication in accordance with the law after providing due and reasonable opportunity of being heard to the assessee. - Decided in favour of assessee for statical purposes.
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2015 (2) TMI 1
Addition on interest receivable from GSI - accrual of interest - appellant had advanced a loan had accrued to appellant this year - Held that:- Going through the orders of authorities below and Co-ordinate ‘D’ Bench decision in assessee’s own case for A.Y. 05-06, facts are similar and matter has been set aside by the Co-ordinate ‘D’ Bench on similar issue to the A.O. for re-examination of explanation given by the appellan. As before us that the interest up to the end of the year has already been provided/accrued in excess, then no interest income is required to be accrued during the year. Accordingly, the matter is set aside to the A.O. on similar directions as given for A.Y. 05-06. - Decided in favour of assessee for statistical purposes. Disallowance of consumption of stores and spares - Held that:- This replacement of stores and spares can be used independently and its of replacement of plant and machinery. As per A.O’s. observation it has endorsing benefit to the assessee. The matter is required to re-examine with reference to addition confirmed by the CIT(A). The A.O. is directed to re-examine the nature of expenditure item-wise and take decisions as per law. - Decided in favour of assessee for statistical purposes. Disallowance of advances - assets leased by the appellant to Western Railway - Held that:- The appellant had 6000 employees. For them, there is a Staff Credit & Consumers Co-operative Society. The appellant had obligation to provide certain facilities to the employees to motivate them as per management principle to get committed services from them. The appellant does not have any hope of recovery of this amount. Therefore, we reverse the order of CIT(A) on this ground. - Decided in favour of assessee. Interest claimed u/s. 36(1)(iii) - diversion of borrowed funds to subsidiary and associate concerns - CIT(A) deleted addition - Held that:- When no interest bearing funds have been diverted to the sister concern by way of interest free advances. The question of going into the commercial expediency of such loans would not arise. In fact, in the light of the findings the question as formulated while admitting the appeals would not arise as on facts there is no diversion of interest bearing funds to interest free advances. Disallowance made under section 36(1)(iii) of the Act correctly deleted.- Decided in favour of assessee. Expenses on protecting the assets of M/s. Gujarat Narmada Auto Ltd. (GNAL), a sister concern of the assessee disallowed - Held that:- The Hon’ble Tribunal in assessee’s own case for A.Y. 03-04 to 05-06 has deleted the disallowance of expenditure on maintenance of assets of GNAL. It is a covered matter by the earlier decision of the Co-ordinate Bench. Facts are identical. Expenses were incurred for business expediency. Thus, we delete the addition and confirm the order of the CIT(A). - Decided in favour of assessee. Deduction by the CIT(A) for Information Technology Related Services paid to M/s. Infinium (India) Ltd. - Held that:- on’ble Tribunal in assessee’s own case in A.Y. 03-04 to 05-06 had deleted the disallowance of expenditure incurred in IT business. After following the Co-ordinate Bench decision for A.Y.05-06 in assessee’s own case. The presumption of the A.O. that these expenses were not recovered from M/s. Infinium (India) Ltd. without any basis. He has not brought on record any contradictory evidence to show that the expenses claimed by the assessee are not genuine. Therefore, we do not find any infirmity in the order of the CIT(A) and confirm the order of CIT(A). - Decided against revenue. Disallowance u/s.14A - CIT(A) deleted the addition - Held that:- was invested out of surplus fund of the part and for it no borrowing had been made during the year the appellant had re-paid the loan on ₹ 95 crore. There is no dividend income during the year from the company. The Hon’ble tribunal in assessee’s own case for A.Y.03-04 to 05-06 had deleted the disallowance u/s.14A. The issue is identical. The appellant had surplus fund no nexus has been established by the A.O. that borrowed fund had been utilized in purchase of shares. After considering the facts and arguments from both the sides, we do not find any infirmity in the order of the CIT(A). - Decided against revenue. Disallowances u/s. (40)(a)(ia) on account of non deduction of TDS on CHA-charges - Held that:- There was no question of deduction tax at source when the payment made by the agent is reimbursed to it. The Circular mentioned by the ld. A.O. is applicable for payment made to principal to principal. The nature of payment is reimbursement of actual expenses incurred by the agent which necessary evidence has been filed before us. The agent had deducted the TDS on these payments and paid to the exchequer within prescribed time. Thus, we do not find any reason to intervene in the order of CIT(A). - Decided against revenue.
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Customs
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2015 (2) TMI 32
Waiver of pre deposit - Whether on the facts and circumstances of the case, the second respondent Tribunal, viz., Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Chennai is right in holding that the appellant has not made out a prima facie case in his favour against the demand and therefore directing the appellant to pre-deposit a sum of ₹ 45 lakhs for the entertainment of the appeal. - Held that:- Tribunal was benevolent in ordering pre-deposit of ₹ 45.00 lakhs, which comes to approximately 30% of the total amount demanded. It is seen that the Tribunal is consistently following the procedure of ordering 25% of the total demand in many cases. The grant of waiver of pre-deposit depends on the facts and circumstances of each case and the discretion is vested with the Tribunal to grant the same. Even assuming that the appellant had paid a sum of ₹ 27.00 lakhs, the same comes to only 17% of the total demand, which is not a substantial amount. Even the pre-deposit ordered by the Tribunal and the amount paid by the appellant, which comes to approximately ₹ 72,00,000/-, do not cover 50% of the total amount demanded. Since the appellant, at the threshold, did not show any documentary evidence showing prima facie case in their favour, much less financial hardship, we are not inclined to interfere with the order of the Tribunal. More over, the appellant had admitted the undervaluation of three bills of entry. Hence, the Tribunal is justified in ordering pre-deposit of ₹ 45.00 lakhs. - no question of law much less any substantial question of law arises for consideration - Decided against assessee.
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2015 (2) TMI 31
Seizure of cash - Cash seized on suspicion - Petition filed without answering the summons - Held that:- Respondent had not responded to the five summons issued to him by the concerned officer of the Department (beginning from 16.07.2014 to 14.08.2014) and instead he filed W.P.No.22700 of 2014 before this Court on 18.08.2014. The Respondent/Petitioner is obliged to attend in pursuance to the summons issued under Section 108 of the Customs Act and is expected to state the truth and further he is to appear before the officer concerned in obedience to the summons issued and in compliance with law. Without making his appearance before the concerned officer and avoiding the five summons issued, the filing of Writ Petition by the Respondent/Petitioner is a premature and otiose one. Ordinarily, as against the issuance of summons, a Writ Petition would not lie. When the Respondent had not participated in the enquiry/investigation proceedings by dissuading the five summons issued to him, then, the filing of the Writ Petition by him is devoid of merits, in the considered opinion of this Court. In view of the fact that the Learned Single Judge had not borne in mind the ingredients of sub-section (3) of Section 108 of the Customs Act, 1962 which makes it mandatory upon the person summoned under that Act to state the truth upon any subject respecting which he is examined or makes a statement, this Court comes to an inevitable and irresistible conclusion that the views taken by the Learned Single Judge that 'Suspicion cannot take the place of proof, however, strong it may be. Therefore, refusing to order the provisional release of the cash seized from the premises of the petitioner in the second writ petition, may give a leverage or licence to the Respondents to stamp any item or cash seized from any office premises as the sale proceeds of smuggled goods' and consequently, allowing the said Writ Petition by directing the Appellants to return the amount of ₹ 7 ,00,000 /- of Indian currency seized from the office premises of the Petitioner on 24.06.2014 etc., are clearly unsustainable in the eye of law. Furthermore, the observation of the Learned Single Judge in the Writ Petition to the effect that 'The Constitutional guarantee with respect to the right to property under Article 300A cannot be allowed to be infringed at the drop of the hat, by allowing the officers to walk into any office and seize cash on the ground that they represent the sale proceeds of the smuggled goods.' is not a correct and legally valid one, in the considered opinion of this Court, based on the facts and circumstances of the present case which float on the surface. Viewed in that perspective, this Court, to prevent an aberration of justice and in furtherance of substantial cause of justice, interferes with the said order dated 08.10.2014 passed by the Learned Single Judge in [2015 (1) TMI 1100 - MADRAS HIGH COURT] and sets aside the same. - Petition disposed of.
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2015 (2) TMI 30
Condonation of delay - Benefit of exemption under notification No.21/02 dated 1.3.02 - Held that:- In order to test the bona fides of the appellant/importer and his sincerity in pursuing the matter, this Court called upon the appellant/importer to deposit an amount of ₹ 2 Lakhs as condition precedent to hear the appeal, which has been complied with by the appellant/importer and proof towards such deposit has also been produced before this Court. In such circumstances, this Court is inclined to proceed with the matter by examining the substantial issue relating to delay in filing the appeal and the explanation given thereof. The reason for non-appearance of the appellant/importer before the Tribunal has been explained stating that as the appellant/importer was on Haj pilgrimage in November, 2010, the affairs of the company was left at the hands of the staff, who had mismanaged the same and, therefore, the appellant/importer was in a quandary. On a perusal of the materials available on record, we find some justification in the explanation given by the appellant/importer, he being the sole proprietor. Further, the plea taken by the appellant/importer is acceptable for the reason that it is a case of proper import after assessment by an appropriate officer in the month of June, 2003 and, thereafter, investigation was mooted by the DRI, which culminated in the show cause notice in February, 2005. The appellant has been pursuing the matter from the stage of show cause notice, adjudication, appeal before the Commissioner, further appeal before the Commissioner (Appeals) and, thereafter, before the Tribunal in the first round. On remand by the Tribunal, the appellant/importer diligently pursued the matter before the Commissioner of Customs in the first de novo proceedings and once again on appeal to the Tribunal and subsequent remand order dated 20.10.09, pursued the matter sincerely in the 2nd de novo proceeding before the Commissioner of Customs. In view of the conduct of the appellant/importer in showing his bona fide by making the deposit as ordered by this Court reaffirming his sincerity in pursuing the matter, we find that his intention in pursuing the appeal is bona fide and the inaction that resulted in the delay, as attributed by the Tribunal to the appellant/importer, is only on account of the appellant/importer going on pilgrimage and, therefore, the inaction can be attributed only to the staff while the appellant/importer was away and the plea of mis-placement of the order, as pleaded by the appellant/importer is acceptable in the circumstances as aforementioned. In such view of the matter, this Court is of the considered view that the Tribunal should have taken a lenient view in condoning the delay. The dismissal of the appeal thereof, without considering the explanation offered by the appellant/importer, is erroneous and is liable to be set aside. - Matter remanded back - Delay condoned.
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2015 (2) TMI 29
Clearance of crude oil - whether the Crude Palm Oil imported by the appellant can be cleared availing exemption under Notification No. 12/2012, dated 17-3-2012 - Held that:- As the respondent-company has been found eligible on facts to claim exemption benefit under the department’s own Notification No. 12/2012 and as the regulations require that product should be edible palm oil and therefore imported variety requires refining, we called upon the respondent-company to submit an undertaking to that effect. Today, Sri S. Ravi, learned senior counsel appearing for the respondent-company, placed before us the signed undertaking dated 21-4-2014, whereby Sushil Goenka, a Director of the respondent-company, undertook that the company would not release the detained imported crude palm oil without refining the same conforming to contents as per notification making it fit for human consumption. This refining is proposed to be undertaken at the respondent-company's factory located at Krishnapatnam Port area, Pantapalem Village, Muthukur Mandal, SPSR Nellore District, where the oil has been warehoused and is presently detained. The respondent-company further confirmed that it would allow access to the officials of the Customs department to supervise and inspect the process so as to ensure compliance with the requirement of refining. - No question of law arises - Decided against Revenue.
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2015 (2) TMI 28
Suspension of CHA License - Bar of limitation - Held that:- CESTAT allowed the appeal by following the decision rendered in the writ petition on the ground that the action was time barred. CESTAT being a quasi-judicial authority, over which this Court has supervisory jurisdiction under Article 226/227 of the Constitution, is bound by the order passed by this Court. The order impugned in the appeal shows that the CESTAT took note of the fact that there was no stay of the order precedent writ. The said order, though on appeal, is not under stay. Therefore, in all fairness, the appellant should actually treat the order of revocation of licence to be under cloud as on date, in view of the order passed in the writ petition. In such circumstances, we do not see any merits in the appeal. - Decided against Revenue.
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2015 (2) TMI 27
Provisional clearance of goods - Imposition of conditions for clearance - Held that:- It is evident that an appeal lies in respect of any “decision or order passed under the Customs Act”. The wide nature of the power exercised in the circumstances of the case may be gauged by the fact that the concerned authority was approached under the Customs (Provisional Duty Assessment) Regulations of 2011. Even though the show cause notice has not been concededly issued yet the nature of the orders, passed by the adjudicating authority or the Deputy Commissioner “as in this case” do have consequence. The petitioner urges that these consequences are adverse to it. As such these orders cannot be characterised as merely administrative but made under specific provisions of statutory regulations. They fall within the description of “order or decision” even on the question of the appropriateness of conditions, with respect to provisional clearance and, therefore, this Court is of the opinion that the impugned order is appealable. In view of the fact that the petitioner approached this Court under the mistaken view that an appeal did not apparently lie, this Court is of the opinion that if the concerned appellate authority i.e. appropriate Commissioner (Appeals) is approached within 4 weeks from this day with an appeal the same shall be decided expediently and within six weeks of the decision. - Petition disposed of.
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2015 (2) TMI 26
Reduction in imposed penalty and redemption fine - Misdeclaration of goods - - Held that:- From the cumulative reading of the Section 112 clause (b) it is made clear that if there is any misdeclaration of goods as well as value, penalty can be imposed more than the value of goods and in the instant case, such things have had happened and therefore, the assessee cannot take shelter under clause (ii) of Section 112(b) of the said Act. - It is an admitted fact that only due to misdeclaration of goods as well as duty, the present proceeding has became emanated. Since the present proceeding has become emanated only due to misdeclaration of goods as well as duty, it is needless to say that Clause (ii) of Sub-Section (b) of 112 of the said Act is not applicable to the present case. The Department is entitled to impose penalty on the basis of Section 112(b)(v) of the said Act. Therefore, it is quite clear that the contention put forth on the side of the appellant/assessee is not legally acceptable and the substantial questions of law settled in the present Civil Miscellaneous Appeal are not having substance - Decided against assessee.
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2015 (2) TMI 25
Confiscation - Valuation (Customs) - High Court admitted the appeal of assessee filed against the decision of Tribunal [2003 (12) TMI 139 - CESTAT, KOLKATA] on the following question of law:- Whether the Learned Customs Excise & Service Tax Appellate Tribunal has exercised his discretion arbitrarily while imposing penalty and redemption fine of ₹ 2,50,000/- and ₹ 7,00,000/- respectively. However, Court was not inclined to pass any interim order as this matter is pending for long time. But it expedite the hearing of the appeal.
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FEMA
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2015 (2) TMI 24
Contravention of Sections 18(2) and 18(3) read with Section 68 of the Foreign Exchange Regulation Act, 1973 - Imposition of penalty - whether each of them to whom notices were issued, were during the relevant period “in charge of and responsible to the said company for the conduct of the day-to-day business of the company”. - Held that:- ED has not been able to deny that the SCN was served on FIL and its directors, including the Appellant only at the address of the company and at the time when the Appellant had ceased to be a director. It is not the case of the ED that even after coming to know, when the appeal was filed by the Appellant, that he had ceased to be a director of FIL with effect from 31st October 2001, it offered to serve him a separate SCN at his address. Consequently, it is evident that no SCN was in fact served upon the Appellant at his address as on the date of the SCN, i.e., 28th May 2002. The ED ought to have fairly stated before the AT that since no SCN had been served on the Appellant at his ordinary place of his residence, the AO qua him should in fact be set aside and the ED should be permitted to serve a separate SCN on him. However, even before this Court it was repeatedly asserted that as far as the ED was concerned, it had served the SCN on the Appellant through FIL. Therefore the Court is constrained to observe that the fundamental requirement of the Adjudication Proceedings and Appeal Rules, 1974 (“APAR”) (1974 Rules) and in particular Rule 10 (reproduced herein below) has not been satisfied in the present case. In terms of Rule 10(b), service of notice had to be on either the address of his place of residence or his last known place of residence or the place where he carries on, or last carried on, business or personally works or last worked for gain. There can be no doubt that as on 28th May 2002, i.e., the date of the SCN, it had to be served either at the place of residence of the Appellant or the last known place of his work. As on that date, his address was not the address of FIL. - Even after coming to know that as on the date of the issuance of the SCN, the Appellant was no longer a director of FIL and therefore the notice issued to him at the address of FIL could not obviously be treated to have been served upon him, the ED was not prepared to say that the AO qua him must be set aside on that ground. The AT failed to deal with the central point in the appeal filed by the Appellant. It has also failed to note his submissions in that regard. - The occasion for the Appellant to avail of the defence available to him under Section 68(1) FERA, i.e., to show that he was not in charge of the day-to-day affairs of the company or that the infraction complained of had not occurred with his knowledge or that he had exercised due diligence to avoid such contravention would arise only after he was served with the SCN along with the documents relied upon against him by the ED. In this case, the documents include the statement of Mr. Pradeep Verma. It is not the case of the ED that even on the date of the AO, it had actually served on the Appellant, the documents relied upon in the SCN. Consequently, it is not open to the ED to now contend that even without the relied upon documents being served on the Appellant, he should somehow have made out his case before the AT in support of his defence under the proviso to Section 68 (1) FERA. The impugned AO was in violation of the principles of natural justice, as well as the requirement of Section 51 FEMA read with Rule 10 of the APPR. - impugned AO dated 3rd November 2004 and the impugned order dated 2nd July 2008 of the AT are unsustainable in law and are hereby set aside. - Decided in favour of appellant.
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Service Tax
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2015 (2) TMI 50
Denial of benefit of VCES - Rejection of declaration under second proviso to Section 106(1) of the Finance Act, 2013 - whether the declaration can be denied for a period, which was not covered under the earlier proceeding initiated against the petitioners - Held that:- One or foremost thing to invoke the provisions of the scheme is the declaration by a person as to his tax dues in respect of which no notice or order of determination under the other provisions of the Chapter is issued on or before 1st day of March, 2013. If an issue, which was the subject matter of an earlier notice or on which the determination has already been done in respect of any period, the designated authority was not obliged to issue declaration for any subsequent period on the same issue. - The authorities in the impugned order have clearly indicated that the earlier show cause notice was issued for short-payment of the service tax on account of GTA, Maintenance & Repair Service and BAS and have been decided against the petitioners by the adjudicating authority. The issue involved in the said scheme also relates to the non-payment of the service tax on the component of GTA, Maintenance & Repair Service and BAS. The second proviso envisaged an embargo in making a declaration even for a subsequent period on the same issue. - Court, therefore, does not find that the authorities have, in fact, wrongly applied the said provision. The writ petition is devoid of merit - Decided against assessee.
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2015 (2) TMI 49
Waiver of pre deposit - Erection, Installation and Commissioning Service (ECIS) - Invocation of extended period of limitation - Held that:- Demand of service tax has been confirmed against the applicant No.2 under the category of ECIS. On perusal of some of the works orders, we find that main work assigned as the work orders is fabrication and in the case of Neo Structo Constructions Ltd. (2010 (3) TMI 252 - CESTAT, AHMEDABAD), the Tribunal has held that for the activity of fabrication, service tax cannot be levied. Therefore, on fabrication work no service tax will be levied. In these circumstances, we find some merit in the contention of ld. counsel for the applicant No.2. Therefore, we direct that the applicant No.2 to make a pre-deposit of ₹ 15,00,000/- within 8 weeks and report compliance on 24.03.2015. On such compliance, the balance amount of service tax, interest and penalties against both the applicants shall be remained waived off during pendency of the appeals. - Partial stay granted.
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2015 (2) TMI 48
Denial of refund claim - Bar of limitation - Misrepresentation of facts - Held that:- It is observed that both Orders-in-Original as referred above have duly been served on the representative of the Company. I am not convinced with the pleadings that orders should not have been handed over to Companys representative who have not been nominated through the Resolution of a Company. As it came out that Shri Gaurav Tiwari, employee of the Company has been interacting with the Central Excise Department by receiving and handing over of letters on behalf of the company Orders-in-Original were received by him after coming to the Range Officer on 26/06/2013. There is a misrepresentation by the appellants that Orders-in-Original were actually received on 28/06/2013 in place of 26/06/2013 in contra to the factual position. Appeals were dismissed by the Commissioner (appeal) on the ground of limitation as appeals should have been filed on 25/08/2013 whereas those were filed late, i.e., on 27/08/2013. There has been misrepresentation on the fact of date of receipt of Orders-in-Original. Commissioner (appeal) also held that no reason for late filing of the appeals was brought on record by the appellants. No specific request for condonation of delay was made. Even issue of condonation of delay was not looked into by the Commissioner (appeal) as in the main portion of the appeals, only request relating grant of refund to the appellants was made. - Decided against assessee.
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2015 (2) TMI 47
Waiver of pre deposit - Management Consultancy Service and Various other services - Denial of CENVAT Credit - Held that:- Without giving any findings on the merits of the case, we find in the impugned order that the major demand pertains to Management Consultancy Service and denial of cenvat credit on various services availed by the appellants. In the impugned order, the ld. Commissioner in the case of Management Consultancy Service has sought a verification to be done by the Assistant Commissioner. For denial of cenvat credit, the appellant has not produced any invoice. In these circumstances, the impugned order is not sustainable in the eyes of law and the matter needs examination at the end of the adjudicating authority. Therefore, we set aside the impugned order and remand the matter back to the adjudicating authority to give an opportunity to the appellant to produce all the relevant documents in support of their defence and to obtain verification report from the Assistant Commissioner with regard to the payment of service tax on Management Consultant Service. The adjudicating authority shall hear the appellant on merits to demand service tax for Business Support Serviceand Manpower Recruitment or Supply Agency Serviceand thereafter shall pass an appropriate order in accordance with law on merits of the case , as contended by the appellant before us - Matter remanded back - Decided in favour of assessee.
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2015 (2) TMI 46
Waiver of pre deposit - Classification of service - Business Auxiliary service or Banking and Financial service - appellants were engaged in verifying the personal as well as financial details of prospective/potential customers, conducting field investigation and providing a report of its field investigation to the Bank within the time frame as well as in the form prescribed by the Bank - Held that:- activities undertaken by the appellants do not come under any of the categories specified in the services. Learned AR submitted that appellants are engaged in promotion or marketing of the products of M/s. Kotak Mahindra Bank. We are not convinced by this submission. If the Bank requires the appellant to verify and report on the financial position of the prospective/potential customer identified by the Bank and got the report within the time frame/format, it cannot be said that the appellant is marketing/promoting the business of the Bank. Therefore, prima facie, we find that the Service Tax cannot be demanded under BAS. As regards the services to ICICI Bank on which a portion of the demand has been made, we find that the appellants provide service in relation to collection or recovery of cheques/payments/instalments from the borrowers of the loans; field investigation of the customers pertaining to the personal as well as financial details of prospective customers of Bank. Revenue has taken a view that this amounts to provision of service of recovery agent. According to the definition of collection agent/recovery agent, taxable services means any service provided or to be provided to a banking company or a financial institution including a non-banking/financial company or any other body, corporate or a firm, by any person, in relation to recovery of any sums due to such banking company or financial institutions etc. in any manner. We find that a portion of the services rendered is definitely covered by the definition. Both sides could not quantify the exact amount of tax attributable to this service. But roughly, it was agreed that the amount can be around ₹ 3 lakhs. Having regard to the facts and circumstances discussed above, in our opinion, appellant should deposit an amount of ₹ 3 lakhs (Rupees three lakhs only) towards Service Tax (principal) and ₹ 2 lakhs (Rupees two lakhs only) towards interest within eight weeks - partial stay granted.
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2015 (2) TMI 45
CENVAT Credit - Various services - Held that:- So far as Cenvat credit of ₹ 34,933/- in respect of outdoor catering service is concerned, the same is admissible in view of judgment of Hon’ble Bombay High Court in the case of CCE, Nagpur v. Ultratech Cement Ltd. (2010 (10) TMI 13 - BOMBAY HIGH COURT), as admittedly the number of workers in the appellant’s factory is more than 250 and, hence, the providing of canteen facility to the factory workers is mandatory requirement of the provisions of Section 46 of the Factories Act. As regards the service tax credit of ₹ 27,560/- in respect of maintenance of lawns and gardens, I find that the maintenance of lawns and gardens is a condition imposed by the Rajasthan Pollution Control Board, while giving permission to the appellant to operate this factory, as per the provisions of Water (Prevention and Control of Pollution) Act, 1974 and also Air (Prevention and Control of Pollution) Act, 1981. In view of this, I am of the view that service tax credit in respect of the services for maintenance of lawns and gardens is also admissible. As regards, the service tax credit in respect of maintenance of cycle stand, the same is also a necessary requirement and, hence, the same is cenvatable service. As regards maintenance of guest house, I find that the providing and up-keeping of guest house, which is adjacent to the factory premises, is necessary business requirement inasmuch as the factory is located outside the city boundaries. In the same fashion, it stands held by various decisions that maintenance of residential premises is associated with business activities. - Decided in favour of assessee.
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2015 (2) TMI 44
Denial of CENVAT Credit - Merchant Banking Services - whether or not TR-6 challan evidencing payment of tax after detection of offence case is eligible document for availing Cenvat credit under Rule 9(1)(b) of the Rules, 2004. - Held that:- Respondent issued challan after 14 days of such taxable services and, therefore, it could not be treated as challan under Rule 9(1)(b) of Rules, 2004. There is no dispute that Rule 9(1)(e) permitted to avail credit on the basis of a challan. A challan evidencing payment of Service Tax by the person liable to pay Service Tax under sub-clauses (iii), (iv), (v) and (vii) of clause (d) of sub-rule (1) of Rule 2 of the Service Tax Rules, 1994. - So, it is apparent that after insertion of clause (bb) in Rule 9(1) Notification No. 13/2011 supra, credit can be denied on a challan availed on account of fraud, collusion, etc. Tribunal in the case of M/s. Metafab (2005 (4) TMI 564 - CESTAT CHENNAI) while dealing with Notification No. 6/97-C.E., wherein Rule 57E of the erstwhile Rules was amended, whereby fraud, collusion, suppression of facts, etc., were incorporated as ground for denying the benefit of Rule 57E to a manufacturer of final product receiving inputs on which initially duty had not been paid or had been short-paid on account of fraud, collusion, suppression of facts, etc. In that case, The Tribunal has observed that the said amendment was not applicable prior to the date of Notification. Similarly, in the present case, the denial of credit on the basis of a challan for the reason of fraud, collusion, suppression of facts, etc., would not be applicable prior to the notification, dated 31-3-2011. Hence, I am unable to accept the contention of the learned Authorised Representative. Hence, in the present case, the respondent availed credit on the basis of the challan as specified under Rule 9(1)(e) which cannot be denied. - Decided against Revenue.
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2015 (2) TMI 43
Refund claim under Notification No. 41/2007-S.T., dated 16-10-2007 - Port services - Improper documents - Held that:- The Bill of Lading is not a proper document for either payment or availment of service tax. However, the appellants have now produced invoices. The said invoices were not produced either before the original authority or the Commissioner (Appeals). In this regard, the matter is therefore remanded to the original authority to examine the case. As far as the invoice is concerned, I find that there is no dispute about the fact that the goods were exported. Port services are availed and while availing the Port services the service tax was paid. The fact that M/s. MPRS Shipping & Logistics Pvt. Ltd. is not authorized is not relevant as the said service was originally provided by M/s. APL (India) Pvt. Ltd. In view of the said position, the refund claim amounting to ₹ 13,645/- is allowed. Appellants’ claim is that they have not engaged any transporters for the same but entrusted the whole job to Custom House Agents. The CHA in turn has raised the bills for the transportation charges and as receiver of the said service they have in turn paid the service tax to the Government Account. The objection of the department is that the appellants have not produced lorry receipt and in the invoice the details are not mentioned and it is difficult to co-relate. However, the ld. Counsel submits that they will try to contact CHA to get the lorry receipt and also it will be possible for them to co-relate the bills with the goods exported under Shipping Bill. Since the ld. Counsel undertakes to produce the lorry receipt and make attempt to co-relate the bills with the goods exported, the matter is remanded to the original authority who can examine on the basis of the documents if produced - Decided in favour of assessee.
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Central Excise
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2015 (2) TMI 41
Difference of transaction value at the time of clearance and credit taken – Revenue was of the view that as per Rule 3 (5) of Cenvat Credit Rules 2004 when capital goods on which Cenvat credit had been taken were removed from the factory, the manufacturer of the final product shall pay an amount equal to the credit availed – Held that:- Following decision of CCE, Hyderabad-III Vs. Navodhaya Plastic Industries Ltd. [2013 (12) TMI 82 - CESTAT CHENNAI] - Matter remanded back - Decided in favour of assessee.
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2015 (2) TMI 40
Waiver of pre deposit - Denial of the benefit of Notification No. 23/2003-CE dated 341/03/2003 - Imposition of equivalent penalty - DTA clearances at concessional rate of excise duty - Demand of differential duty - Held that:- As regards the merit of the case, on a plain reading of the exemption notification, what is permitted to be cleared into DTA at the concessional rate under notification No.23/2003-CE is only 50% of the FOB value of exports made during the year. If the clearances exceed this limit, no doubt, the appellant can clear the goods into DTA but duty liability has to be discharged at the full rate of duty. Therefore, there is merit in the contention of the Revenue that the appellant has exceeded the limit for clearances at concessional rate. However, we observe that the excise authorities were aware of the physical exports made by the appellant and also the clearances effected into the DTA. Therefore, they cannot take the plea that the appellant suppressed or willfully mis-stated any facts. In the absence of suppression or willful mis-statement of facts, the demand would be hit by time bar. In view of the above, we are of the considered view that the appellant has made out a prima facie case for grant of stay. Accordingly, we grant unconditional waiver from pre-deposit of dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal. - Stay granted.
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2015 (2) TMI 39
Benefit of Notification 30/2004-CE dated 09/07/2004 - Non fulfilment of condition of non-availment of CENVAT Credit of the duty paid on inputs or capital goods - Held that:- department had also sought the details of the exports made by the appellant as also the stock lying as on 15/08/2008 and the appellant had submitted all the relevant details vide letter dated 16/01/2012. It was therefore, imperative on the part of the adjudicating authority to examine these details and give a specific finding as to whether inputs on which credit was availed was used in the manufacture of goods which were exported. Unfortunately, the Commissioner's order is silent in this regard and therefore, the Commissioner has not complied with the directions contained in the remand order of this Tribunal. We further notice that the findings in the impugned orders are a verbatim reproduction of the findings in the order dated 29/12/2009 which was set aside. This again shows complete non-application of mind and mechanical passing of the order. In view of the above factual position, we are constrained to set aside the impugned order and remand the case back to the adjudicating authority once again to pass a fresh order in terms of the directions given in the remand order dated 11/10/2011 - Matter remanded back - Decided in favour of assesse.
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2015 (2) TMI 38
Waiver of pre deposit - CENVAT Credit - Bar of limitation - benefit of Notification No. 06/2006- CE dated 01/03/2006 - Non maintenance of separate accounts - Held that:- Cenvat Credit Rules, envisages availment of Cenvat credit only when the inputs, inputs services, capital goods are used in or in relation to manufacture of dutiable final products, except in certain situations where the goods are cleared for exports or supplied to UN and other agencies or the clearances are effected under 7 specified notification under the 3 rd proviso to Rule 3 (4) of Cenvat Credit Rules. In all other cases, the conditions for availment of credit has to be scrupulously satisfied. Where the goods are exempted from payment of duty, Cenvat Credit Rules, 2004 does not provide for availment of credit. As per sub-rule (1) of Rule 6, "Cenvat Credit shall not be allowed on such quantity of input used in or in relation to the manufacture of exempted goods or for provision of exempted services", This position has been clarified by the Hon'ble Apex Court in the decision relied upon by the Revenue in the case of Amrit Paper (cited supra). Further even in respect of goods on which payment of duty is remitted, Cenvat credit has to be reversed as per Rule 3 (5C) of Cenvat Credit Rules. Prima facie appellant has not made out any case on merits for a complete waiver of pre-deposit adjudged against the appellant. However, there appears to be some merit in the appellant's contention that part of the demand is time barred inasmuch as in respect of the other unit of the appellant where identical goods were manufactured, the appellant has been disputing the demand for reversal of credit and the appellate authority had confirmed the duty demand only for the normal period of limitation and the demand for the extended period was dropped on account of time bar. In the present case, the demands for the normal period of limitation as informed to us by the appellants is approximately ₹ 19 lakhs. Therefore, we direct the appellant to make a pre-deposit of ₹ 19 lakhs within a period of four weeks - Partial stay granted.
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2015 (2) TMI 37
Waiver of predeposit - Suppression of production of ignots - Revenue is relying upon the private records recovered from the premises which show datewise and heatwise production of ingots - Held that:- Number of ingots manufactured as per the private records is much more than the number of ingots manufactured as shown in the official heat register. Similarly, ingot movement from SSPL to KSPL register also shows the clearances of ingots to KSPL which is not reflected in the statutory records. In view of these, we find that the applicants had not made out a case for total waiver dues. After considering the facts and circumstances of this case, plea of financial hardship and interest of Revenue as provided in Section 35F, the applicant M/s. SSPL is directed to deposit an amount equal to 50% of the duty confirmed within a period of 8 weeks. On deposit of the same, the requirement of predeposit of remaining dues is waived and recovery of the same is stayed in respect of both the appeals. - Partial stay granted.
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2015 (2) TMI 36
CENVAT Credit - Capital goods - endorsed bill of entry - Held that:- The fact of receipt of capital goods and their duty paid character is also not in dispute. It is further not in dispute that the importer has also availed the credit on the same Bill of Entry. The technical and procedural objection raised by the Revenue is that Bill of Entries have not endorsed. I find that the said objection of the Revenue is too hyper-technical and not, prima facie, acceptable. Ld. JCDR submits that if the Bill of Entries itself is not endorsed, the same would lead to gross misutilisation of the facility of Cenvat credit which cannot be appreciated in the present case inasmuch as the fact of receipt of the goods and duty paid character stands verified by the Range Superintendent in favour of the assessee. Further, the fact of endorsement in the Bill of Entry is only to indicate and establish that the goods covered in the said Bill of Entry stands actually supplied to the recipient which object and purpose is clearly obtained by giving a separate declaration. I really fail to understand that when the importer himself has given a separate declaration, the purpose of endorsement on the Bill of Entries is absolutely lost and cannot be adopted as a reason for denial of Cenvat credit. - Stay granted.
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2015 (2) TMI 35
Demand of differential duty from the buyer of coal - Transactional value - Inclusion of royalty and stowing charges - Held that:- At the present stage, it is not in dispute that for the period between 1 March 2011 and 28 February 2013, differential excise duty on royalty and stowing charges has been deposited with the Central Excise Authorities by the coal companies. There is a specific averment to that effect in paragraph 30(b) of the counter affidavit which has been filed in these proceedings. The contracts between the coal companies and coal traders such as the petitioners, are not in the nature of statutory contracts. Though in contractual arena, the exercise of the writ jurisdiction is not, as a matter of principle, excluded under Article 226 of the Constitution, the fact that the purchases were made not in pursuance of statutory contracts but contracts of a commercial nature is a factor which must be placed in the balance. The purchases have been made in pursuance of the Spot E-Auction Scheme, 2007, clause 4.4. of which required the buyers while quoting their bid price to submit the bid price as a base coal price on FOR/FOB colliery basis, exclusive of other charges like statutory levies, taxes, cess, royalty and stowing excise duty and other charges, as would be applicable at the time of delivery. These charges, were to be on the buyers' account. At this stage, another circumstance which would have a bearing on whether the exercise of the writ jurisdiction under Article 226 is warranted is that the terms and conditions governing the Spot E-Auction Scheme specifically embodied an arbitration agreement in clause 11.12. The remedy of an arbitration application under clause 11 is thus available under the Arbitration and Conciliation Act, 1996, including a petition under section 9 or, as as the case may be, an application before the Arbitrator under section 17. The coal companies having made payment of differential excise duty after proceedings were initiated by the Central Excise Authorities, the ends of justice would not require, in our view, any injunction or interference on the recovery notices at this stage. If ultimately, it is held that royalty is in the nature of a tax and, therefore, lies outside the definition of the expression 'transaction value' under section 4(3)(d) of the Act, on the culmination of the reference which is pending before the Supreme Court, any payments which are made in the meantime, would necessarily have to abide by the remedies provided under the Act, including by way of an application for a refund under section 11-B. Hence, at this stage, the only direction, which would be necessary to issue, would be to direct that the coal companies shall maintain a separate statement of account, trader wise, of the amount which is recovered in pursuance of the recovery notices in order to facilitate the adjustment of equities and the working out of rights after the conclusion of the reference before the Supreme Court. - petition disposed of.
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2015 (2) TMI 34
Modification of an interlocutory order - Held that:- Appellant has mainly stressed on the point that clearances of Sulphuric Acid which were effected by the appellant were under Notification No. 4/2006-C.E., dated 1-3-2006 is to fertilizer units and were exempted. We find that, on identical issue, in the case of Bodal Chemicals Ltd. [2015 (1) TMI 817 - CESTAT AHMEDABAD], this Bench had granted unconditional waiver following the various orders of the Tribunal and also relying upon the decision of the Tribunal in the case of Nirma Ltd. v. CCE, Ahmedabad - [2011 (4) TMI 379 - CESTAT, AHMEDABAD] which has been upheld by the Hon’ble High Court of Gujarat [2015 (1) TMI 816 - GUJARAT HIGH COURT]. Accordingly, we allow the modification application and modify our Stay Order dated 15-1-2014 to the extent that the applications filed for waiver of pre-deposit of the amounts involved need to be allowed and recovery thereof stayed till the disposal of appeals. In sum, the applicants need not pre-deposit any amount for hearing and disposal of these appeals - Stay granted.
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2015 (2) TMI 33
Shortage and excesses of goods found - Held that:- Entire case of the Revenue for arriving at the finding of the clandestine removal is based upon the shortages conducted at the time of visit of the officers. Similarly, excess found goods stand confiscated along with imposition of penalty on the sole ground that the same were not entered in the statuary records. - It is seen that appellants are manufacturing different varieties of tiles and shortages and excesses were found only in one variety. Apart from the said shortages, and the statement of representative admitting such shortages, there is no other evidence of record to show that such alleged shortages were cleared by the appellant in a clandestine manner. It is well settled law that shortages by itself cannot be held to be sufficient evidence to conclude the clandestine activities of an assessee. In the absence of any evidence, I find no justification for confirmation of demand or for imposition of penalty on the appellant, on the finding of clandestine removal. As regards excesses, it stand explained that goods in question were not upto the mark and they had applied for destruction of the same. In any case, I find that it is not the Revenue's case that excess found impugned goods are meant for clandestine removal or they are in ready to move condition. As such, I find no justification for confiscation of the same or for imposition of penalties. - Decided in favour of assessee.
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CST, VAT & Sales Tax
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2015 (2) TMI 52
Works contract - supply, laying and spreading of ready mix concrete - Exemption under Notification G. O. Ms. No. 50/90/F6 dated December 10, 1990 - Non production of invoice copy showing price of the material and labour charges separately - Whether, in the facts and circumstances of the case, and in law, a the Appellate Tribunal was right in law in holding that the supply, laying and spreading of ready mix concrete at the customers' site is an outright sale of ready mix - Held that:- On the narration regarding the nature of the activity of the asses-see, it is clear that the Tribunal totally misdirected itself in its understanding of the principle of works contract. As is evidenced from the reading of terms of the agreement referred to in the order of the Tribunal, it is clear that the nature of works entrusted to the assessee is not supplying ready mix concrete mixture simpliciter; on the other hand, the assessee was to provide men and materials in laying concrete mixture on the area specified by the purchaser. The supply had to be done through its staff and that the assessee was responsible for quality of the concrete and the laying also Further in the event of any leakage arising therefrom in future, the responsibility was cast upon the assessee to compensate the same. When that being the case, we do not find any justifiable ground in the Tribunal's view that on the mere absence of the word "works contract" in the agreement, the transactions have to be treated as sale. Thus, on going through the nature of the work executed and the agreement and the responsibility cast upon the assessee on the quality, we have no hesitation in accepting the plea of the assessee that the transaction is one of works contract and that the assessee is entitled to have the benefit of exemption as had been pointed out in Government order referred to in circular dated April 29, 2004, viz., G. O. Ms. No. 50/90/F6 dated December 10, 1990. - we set aside the order of the Tribunal, holding that the transaction is a composite works contract involving men and labour - Decided in favour of assessee.
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2015 (2) TMI 42
Set off under rule 41E of the Bombay Sales Tax Rules, 1959 - Held that:- In the garb of deciding the issue of applicability of the Hon'ble Supreme Court's judgment in M/s. Loharn Steel Ltd. (1996 (12) TMI 328 - SUPREME COURT OF INDIA) to the facts and circumstances of the present case, the tribunal travelled beyond its jurisdiction and authority. It declared rule 41E as ultra vires and unconstitutional and which it has no authority to declare. Apart therefrom the tribunal was obliged to consider the issue as to whether any assistance can be derived from the judgment of the Supreme Court assuming that the issue involved was identical. Assuming that the controversy dealt with by the Supreme Court was identical then relying on the said judgment whether rule 41E and plain language thereof can be ignored is a further question. The tribunal in the present case and in the second appeal of the assessee could not have therefore ignored rule 41E and virtually declared it unconstitutional being ultra vires Article 304(a) of the Constitution of India. This was not a permissible exercise as the tribunal derived its authority under BST Act itself. Issue of constitutionality and legality of rule 41E to the extent noted above could not have been decided by the tribunal in the second appeal of the assessee. It has clearly erred in law in undertaking the exercise of deciding the constitutionality and legality of the said rule. Therefore, the two questions will have to be answered by holding that the claim which was made in alternate would have to be dealt with and decided on the touch stone of rule 41E as it stood at the relevant time and its clear language. The tribunal could not have ignored the same in dealing with the alternate claim. - Reference disposed of.
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Wealth tax
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2015 (2) TMI 51
Enhancement in value of land - Whether the first appellate authority has erred in confirming the addition made by the AO towards enhancement in the value of the land owned by the firm where the appellant is a partner - Held that:- Tribunal has upheld the first appellate order in that case wherein the first appellate authority had held that the Assessing Officer should have taken the value of assets as reflected in the balance-sheet. In this regard the first appellate authority had follow the first appellate order on similar additions in the earlier years wherein the first appellate authority had noted that as per Rule 14 of Schedule III for valuing asset of business Sub Rule 2 (ii) of Rule 14 states “ in the case of an asset on which no depreciation is admissible, its book value.” Respectfully following the above decisions in the present appeals we hold that the land being used as business asset, its value was to be determined as per Rule 14 and not as per Rule 20 of Schedule III. Consequently, the orders of the authorities below on the issue are set aside with the direction to the AO to delete the addition made on account of enhancement in the value of land owned by the Firm where the appellant is a partner. - Decided in favour of assessee.
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2015 (2) TMI 22
Wealth tax assessment - Wedding Gifts Trust - Levy of tax u/s 21 of the Wealth Tax Act - Whether the assessment has to be made under sub-section (1) or sub-section (4) thereof - Held that:- The terms of the Trust Deed are very clear and unambiguous. Even while conferring a limited privilege of wearing the ornaments in favour of the named women, the Trust Deed has clearly mentioned that on the death of the two women, the jewellery shall devolve upon their children - It is true that during the life time of the two women, it is difficult to treat any particular individual as the immediate beneficiary, particularly when the right was restricted only to the one of wearing and returning the jewels. However, in law, what becomes necessary is whether there are any beneficiaries at all. It is immaterial whether they are the beneficiaries at present or in future. Once the Deed has stipulated that on the death of the two women, their children would become the beneficiaries, the occasion to invoke Section 21 (4) of the Act does not arise. The inescapable conclusion is that the assessment must be under Section 21 (1) of the Act. The expression where the shares of the beneficiaries are indeterminate or unknown carried with it, by necessary implication, a situation where the beneficiaries themselves are indeterminate or unknown. Such, for example, would be the case in the modified illustration given above. There, the beneficiaries are such of the children of A as the trustee might think fit and the beneficiaries themselves would, therefore, be indeterminate and unknown and yet sub-section (4) of Section 21 would apply in their case. To take any other view would be to deny full meaning and effect to the words where the shares of the beneficiaries are indeterminate or unknown and to create a lacuna where, even though the beneficial interest in the remainder is disposed of under the trust deed, such beneficial interest would escape assessment. The correct interpretation of sub-section (4) of Section 21 must, therefore, be that even where the beneficiaries of the remainder are indeterminate or unknown, the trustee can be assessed to wealth-tax in respect of the totality of the beneficial interest in the remainder, treating the beneficiaries fictionally as an individual. - view taken by the Commissioner and the Tribunal is correct - Decided in favour of assessee.
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Indian Laws
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2015 (2) TMI 23
Contempt of court - Contempt petition suo motu arise from the editorial published in Indian Express - whether the contempt of a Commission or Commissioner appointed under the 1952 Act tantamounts to contempt of the High Court or Supreme Court of which the Commissioner is member needs to be authoritatively settled by the Supreme Court in view of the reoccurrence of the issue. - Held that:- Commission appointed under the 1952 Act is in the nature of a statutory Commission and merely because a Commission of Inquiry is headed by a sitting Judge of the Supreme Court, it does not become an extended arm of this Court. The Commission constituted under the 1952 Act is a fact finding body to enable the appropriate Government to decide as to the course of action to be followed. Such Commission is not required to adjudicate upon the rights of the parties and has no adjudicatory functions. The Government is not bound to accept its recommendations or act upon its findings. The mere fact that the procedure adopted by the Commission is of a legal character and it has the power to administer oath will not clothe it with the status of Court. That being so, in our view, the Commission appointed under the 1952 Act is not a Court for the purposes of Contempt of Courts Act even though it is headed by a sitting Supreme Court Judge. Moreover, Section 10A of the 1952 Act leaves no matter of doubt that the High Court has been conferred with the power to take cognizance of the complaint in respect of the acts calculated to bring the Commission or any member thereof into disrepute. Section 10A provides the power of constructive contempt to the Commission by making a reference to the High Court with a right of appeal to this Court. - Petition dismissed.
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